The defined contribution (DC) section of Schroders Retirement Benefits Scheme (SRBS) has allocated £48m, 20 per cent of the default growth fund, to the Schroders Capital Climate+ Long Term Asset Fund (LTAF) as it looks to enhance its private markets exposure.

The allocation to the LTAF, which was the UK's first to receive regulatory approval, aims to provide greater diversification benefits and access to the robust returns private markets can deliver for members.

The fund looks to generate long-term risk-adjusted returns, while also contributing positively to climate change and supporting the transition towards net zero, with a particular focus on four long-term themes: climate mitigation, climate adaptation, biodiversity/natural capital and social vulnerabilities.

As part of this, it invests across infrastructure, real estate, private equity, natural capital and biodiversity-focused assets through a mixture of Schroders Capital and externally managed funds.

Commenting on the allocation, SRBS chair, Lisa Mundy, said: “A review of our default investment strategy found that our members would gain valuable diversification benefits through an allocation to private markets.

"We believe the addition of Climate+ supports the trustee’s objective of enhancing overall returns compared to our previous default investment strategy, thereby improving retirement outcomes for our members.

"It also supports the trustee’s stewardship objectives in relation to climate change and sustainable investment.”

Adding to this, Schroders head of UK DC clients, Ryan Taylor, said: “The addition of the Schroders Capital Climate+ LTAF means SRBS members now have access to a multi-asset private markets fund which offers significant diversification across asset classes and geographies and the potential to enhance returns over the long-term.

“This was made possible through a careful and considered approach which addressed what previously have been the specific obstacles preventing private market allocations.

"The LTAF structure overcomes these historic barriers to entry while taking into account the liquidity needs relating to the wider portfolio and members’ retirement glidepaths.”

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